Forecast

AARP pushes state to add retirement savings plan to budget proposals

AARP wants lawmakers to consider retirement savings

By Brian Nearing
| on March 15, 2017

Albany

The state AARP expressed disappointment Wednesday that none of the budget proposals by Gov. Andrew Cuomo and state lawmakers include a state-managed retirement savings plan for the half of working New Yorkers who have no such plans at work.

"Our leaders have failed to address a real and growing retirement savings crisis in this state, and that's a shame," said AARP New York State Director Beth Finkel. "Middle-class New Yorkers will continue falling further behind until this is done. Anything short of including a simple option to help people save for their future in a final state budget would be shortsighted and unfortunate, and it would hurt millions of middle-class families struggling to prepare for their futures."

Finkel said 2016-2017 proposed budgets offered by the governor, the Assembly and the Senate ought to include provisions of a bill currently in the Legislature called "Secure Choice," which would create a savings plan available to workers whose employers offer neither a pension or a 401(k) plan.

Under the Secure Choice program, workers could enroll in an automatic deduction program invested through private financial consultants that were selected by the state through a competitive bidding process. This legislation has been offered since 2015, but has failed so far to get out of committee in the Legislature.

Such state-managed systems have already been adopted by Illinois, Oregon, California, Connecticut and Maryland. But political headwinds appear to be gathering against more such state-managed plans.

Last month, the U.S. House of Representatives voted to rescind federal Labor Department rules meant to clear the way for such state-created plans.

In New York, a 2015 study by AARP found that about half of private-sector workers in the state — about 3.5 million people — don't have a pension or 401(k) plan at their jobs. That survey also found that about a quarter of Capital Region residents have no retirement savings, either through work or personally.

Last year, Gov. Andrew Cuomo announced creation of a task force to study the retirement issue, called the Saving More to Achieve Richer Tomorrows Commission. Headed by Mary Beth Labate, a top SUNY official who spent a year leading the state's Division of the Budget, the commission has met three times since August and could issue recommendations shortly.

In New York state, the Business Council also has opposed such a measure as an unneeded government mandate and potentially ineffective because workers can choose not to take part, according to a June 15, 2016 legislative memo by the Council.

A state system could also encourage companies that currently offer pensions or 401(k) plans to end those programs and force workers into the public system, the memo said.

Nationally, business lobbying groups, like the U.S. Chamber of Commerce, have come out against state efforts, claiming saving plans would burden businesses and not adequately protect workers.

State-managed plans would discourage companies from "creating and maintaining more generous retirement plans," according to a February statement from the Chamber, which added that state systems would "radically reorder the retirement savings system."